A familiarization tour undertaken by the Ghana Revenue Authority (GRA) at the Makola Market and the Abossey Okai spare parts enclave in Accra has confirmed that a large number of traders do not issue Value Added Tax (VAT) receipts for their business transactions.
The Authority uncovered that on average, traders only apply VAT for purchases of goods once or twice a day, no matter how many transactions they engage in throughout the day.
Currently, the country’s tax to Gross Domestic Products (GDP) ratio is 13.1 percent. Averagely, within lower middle income countries to middle income countries, the tax to GDP ratio hovers at around 18 to 20 percent. This indicates that Ghana’s tax to GDP ratio is very low and indeed ranks among one of the lowest on the African continent.
In February, government tasked the GRA to grow the contribution of tax revenue to the national economy from the 13.1 to 15 percent for 2019.
In enhancing the domestic revenue mobilization drive to enable the Authority exceed this year’s set target of Gh¢44 billion, the GRA interacted with traders at the Makola Market during the familiarization tour to know why a large number of their traders fail to issue VAT invoices during business transaction.
According to the traders and union leaders at the Ghana Electrical Dealers Association (GEDA) in Makola and other stakeholders, their failure results from the lack of continuous sensitization and education of customers to come to terms with the use of VAT receipts.
According to them, a large number of customers fear that issuing them with the VAT invoices will result in increases in prices of the items they wish to buy; hence customers look for alternative shops where they can buy those same items but at a cheaper price because VAT is not applied.
The VAT Act 2013 (Act 870) makes it mandatory for traders to issue VAT invoice in every transaction as it forms part of the final price consumers pay for goods and services.
The GRA reiterated its commitment to continue sensitizing the business community on the need to issue out VAT invoice, but cautioned they will step up their vigilance to ensure that VAT is applied and VAT receipts are issued across board by every trader.